Jones Lang LaSalle's Kenneth Rudy

GlobeSt.com: Is there any one factor why you think we are starting to stabilize? I am wondering about the government initiatives, especially the new plan to stabilize the financial markets.

Rudy: To get any sort of stabilization returned to the securitization markets one needs to rebuild confidence. Confidence was shattered by aggressive underwriting, and other actions like special servicers buying bottom pieces of capital stack to generate fees and rating agencies not doing the best job of rating securities. So new rules that we are hearing about now – like orginators retaining 5% of the risk in a securitization -- and enhancing criteria and rules for rating agencies so investors get a better look at the underlying collateral are important.

GlobeSt.com: Do you think 5% is enough of the loan to retain?

Rudy: That is hard to say – we are in a highly unusual environment in this country's history.

GlobeSt.com: Also, I hear a lot of complaints that the government has not been consistent in its approach to dealing with these problems, which the market hates even more than the problems themselves.

Rudy: It's true you have seen the administration announce certain measures and then back away from them. They throw stuff out for comment and to get a market reaction. Thankfully then they listen and adjust. Again, this is an unusual environment right now, so it is hard to know exactly what is going to work.

GlobeSt.com: You mentioned the rating agencies. What do you think of the war that is brewing between S&P and Fitch and Moody's. I am referring to S&P announcement two weeks ago that it intended to downgrade a lot of the CMBS collateral.

Rudy: S&P definitely threw the market for a loop with that – spreads widened after that announcement. But you have to realize that the rating agencies have been under the spotlight in terms of their own rating standards and where their own analysis was during the market run up. Also it is very complicated to value the securities –the market doesn't have enough pricing transparency. So I cant say I blame S&P for getting more conservative and being more careful.

GlobeSt.com: It could have an impact on what collateral is used for TALF, which will only take AAA rated securities by two separate agencies. Essentially it will limit the number of securities that can be used in TALF.

Rudy: Yes, it does throw cold water on some of these deals. But I have read Treasury might reconsider its criteria because of that – it could allow collateral from securities that were rated AAA at the time of their announcement, in effect grandfathering in these securities.

It's a little bit smoke and mirrors– but also another reflection of how the administration is trying to be nimble right now.